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What are the tax implications of proceeds from charitable fundraising activities donated to assist businesses in financial difficulties due to the pandemic?
Corporate tax
Businesses subject to corporate tax shall book charitable donations received as revenue. As currently effective legislation does not allow for tax base reduction in relation to donations received, all donations shall constitute a part of the taxable revenue basis.
As for the corporate taxpayer making the donation, the grants only qualify as donations if given to a public benefit purpose entity or a church, and are granted as part of a corporate social responsibility commitment, assuming that the donation does not lead to any financial gains. Grants that qualify as donations are recognized as expenses upon calculation of the corporate tax base and also allow for a tax base reduction, assuming that the granting entity has obtained a receipt of donation issued by the public benefit purpose entity. Grants that do not qualify as donations can only be recognized as expenses if the donor has a statement from the recipient stipulating that it would not have been unprofitable in the given financial year without the donation, and that corporate taxes were paid after the grant.
Source: National Tax and Customs Administration (NAV)
Businesses subject to corporate tax shall book charitable donations received as revenue. As currently effective legislation does not allow for tax base reduction in relation to donations received, all donations shall constitute a part of the taxable revenue basis.
As for the corporate taxpayer making the donation, the grants only qualify as donations if given to a public benefit purpose entity or a church, and are granted as part of a corporate social responsibility commitment, assuming that the donation does not lead to any financial gains. Grants that qualify as donations are recognized as expenses upon calculation of the corporate tax base and also allow for a tax base reduction, assuming that the granting entity has obtained a receipt of donation issued by the public benefit purpose entity. Grants that do not qualify as donations can only be recognized as expenses if the donor has a statement from the recipient stipulating that it would not have been unprofitable in the given financial year without the donation, and that corporate taxes were paid after the grant.
Source: National Tax and Customs Administration (NAV)